Correlation Between Iron Road and China High
Can any of the company-specific risk be diversified away by investing in both Iron Road and China High at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Iron Road and China High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road Limited and China High Speed, you can compare the effects of market volatilities on Iron Road and China High and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Iron Road with a short position of China High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and China High.
Diversification Opportunities for Iron Road and China High
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iron and China is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and China High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China High Speed and Iron Road is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Iron Road Limited are associated (or correlated) with China High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China High Speed has no effect on the direction of Iron Road i.e., Iron Road and China High go up and down completely randomly.
Pair Corralation between Iron Road and China High
If you would invest 13.00 in China High Speed on November 28, 2024 and sell it today you would earn a total of 0.00 from holding China High Speed or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road Limited vs. China High Speed
Performance |
| Timeline |
| Iron Road Limited |
| China High Speed |
Iron Road and China High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and China High
The main advantage of trading using opposite Iron Road and China High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, China High can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China High will offset losses from the drop in China High's long position.| Iron Road vs. Tapestry | Iron Road vs. Skechers USA | Iron Road vs. World Houseware Limited | Iron Road vs. Rocky Brands |
| China High vs. Shanghai Electric Group | China High vs. Xinjiang Goldwind Science | China High vs. Fanuc | China High vs. Rockwell Automation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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